OKLAHOMA LOTTERY COMMISSION Minutes of Meeting July 7, 2005 1:30 pm Members present: Mr. George R. Charlton, Jr. Mr. Ron Norick Mr. James Orbison Mr. William Paul Mr. Thomas Riley, Jr. Members not present: Ms. Cindy Ball Dr. Linda Dzialo Others attending: Jim Scroggins, Executive Director of Lottery Commission Becky Wilson, Office of State Finance, Recording Secretary Rollo Redburn, Lottery Commission Beverly Hughes, Lottery Commission Jerry Havener, Lottery Commission Gay Tudor, Office of the Attorney General Pat Hall, Scientific Games Angie Atauvich, GIT/Capitol Network News Tim Martin, Oklahoma State Bond Advisor’s Office Jim Joseph, Oklahoma State Bond Advisor’s Office Tony Thornton, The Oklahoman Jeff Packham, Journal Record Kendal Kelly, Associated Press Don Davis, Office of the Governor Angie Bruss, KFOR-TV Gary Bush Franklin Jay Kivel Rita Hall The Oklahoma Lottery Commission met on July 7, 2005, at approximately 1:30 pm, in the Governor’s Blue Room, 2nd Floor of the State Capitol. The meeting was held in accordance with the Open Meeting Act. Call to Order The Chairman asked Becky Wilson to call the roll. Ms. Wilson called roll and the Chairman declared a quorum. ITEM 2 Announcement of filing of special meeting notice and positing of the agenda in accordance with the Open Meeting Act The Chairman asked Becky Wilson to confirm that the agenda was posted in accordance with the Open Meeting Act. Ms. Wilson did confirm the agenda was posted within 24 hours notice. ITEM 3 Approval of Minutes of the June 27, 2005 Special Meeting The Chairman asked if there were any comments on the Minutes and there being none, the Chairman asked if there was a motion to approve the minutes. Mr. Charlton so moved and Mr. Norick seconded. Ms. Wilson then called roll and all were in favor so the motion passed. ITEM 4 Interim Committee of Operations and Structure Report – William Paul The Chairman asked Mr. Paul to give an update on the Interim Committee. Mr. Paul noted that the Interim Committee had been working on the hiring of legal counsel. They received 13 responses to the RFP which Mr. Redburn has copied and given to all Commission members. The Committee had a teleconference meeting on Friday, July 1 and went through some preliminary matters and agreed on a procedure narrow down the list. The Committee will be interviewing with those that make the final cut and anticipate doing that next Tuesday morning, July 12. We hope to have a recommendation to the full Commission at the meeting next Tuesday afternoon and to proceed from there. ITEM 5 Executive Director Report Mr. Scroggins noted that the Lottery staff has been working on responses to the questions received on the RFPs. He has also been working with Mr. Riley and Mr. Redburn on the FY-06 Budget. Mr. Norick asked if he had received major questions on the RFPs and Mr. Scroggins noted that it was nothing that couldn’t be resolved, but they were meeting with DCS later in the afternoon to verify responses. 2 Discussion and Possible Approval of Financing for the Lottery Commission Mr. Riley updated the Board that himself, Mr. Redburn and Mr. Scroggins along with Mr. Joseph and Mr. Martin attended the Council of Bond Oversight meeting on June 30. The Council voted to approve the Lottery Commission’s financing. Mr. Riley noted that he had received a letter in the mail signifying the Council’s approval subject to 5 documents that they must receive back – Approval of Transaction by the Lottery Commission, Approval from the Attorney General’s office, Approval from the State Bond Advisor’s Office, Receipt of the Bond Council’s opinion and Receipt of final documentation of the transaction. As stated before, there is a 30 day contest period after which no one can contest the financing. It was the best interest of the Commission to observe that period, but that delays the receipt of funding 32-33 days. The receipt of money affects Mr. Scroggins ability to build up staff in advance of commencement of the lottery and each day it is delayed, it runs the risk of $800,000 in gross revenues per day for the lottery. Mr. Riley then noted he had a lender proposal and would recommend the Board approve the financing of this proposal in order to obtain funds. The Chairman noted that all members of the Board had received a copy of the proposal. Mr. Riley informed the Board that the proposal is from JP Morgan Chase Bank and for a $10 million dollar revolving line of credit. Mr. Riley recommends that the Board accept the proposal from JP Morgan Chase. The Chairman suggested that a part of the motion should include that the intent of the Board is to pledge its revenues to the fullest extent allowed by the law and Mr. Riley concurred with his suggestion. Mr. Riley also noted it is important that we have a resolution authorizing the issuance of these notes and identifying the proceeds. Mr. Gary Bush then noted the Board needs to approve who the lender is, a cap on the basis points, a cap on the expenses, and a cap on the revenues that are going to be pledged. The Chairman would also need to have the ability as authorized by the Board to execute a certificate showing that we have come within those caps. Mr. Bush recommended the Board cap their expenses at $10,000. Mr. Bush then handed out a copy of the Resolution to each Board member. He suggested the following changes: 1) On page 1, strike Governor’s Large Conference Room and replace with Governor’s Blue Room; 2) On page 2, Section 1, in the blank space, place $10,000; 3) About half way through that paragraph, after “Note” put payable from and secured by the legally available revenues of the Commission; and 4) Strike Vice Chairman and replace with Treasurer in both Section 1 as well as Section 4. Mr. Riley motioned to adopt the resolution as changed and Mr. Charlton be appointed Acting Secretary to execute the document. Mr. Norick seconded. Ms. Wilson then called roll and all were in favor except Mr. Paul who has recused himself from this matter. The motion passed. A copy of the adopted resolution is attached to these minutes. ITEM 7 Discussion, Possible Action and Possible Approval of FY-2006 Budget for the Lottery Commission Mr. Riley noted he had sent each Board member a copy of the Budget. The Office of State Finance and the State Auditor require the budget to be turned in by June 30. After a brief discussion, Mr. Riley motioned the particular budget projection for year ended June 30, 2006 be approved for furnishing to the Office of State Finance and the State Auditor to meet the 3 ITEM 8 Scheduling of Next Special Meeting The Chairman announced the next scheduled special meeting will be held Tuesday, July 12th at 1:30 pm in the Governor’s Large Conference Room, 2nd Floor of the State Capitol. ITEM 9 Adjournment There being no further business, the Chairman asked if there was a motion to adjourn. Mr. Norick moved for adjournment and Mr. Paul seconded. Roll was called and all were in favor so the meeting was adjourned. Submitted by: George Charlton, Acting Secretary Approved by: James Orbison, Chairman George Charlton, Acting Secretary 4